Income tax

Allowances 2018/19 2017/18
Personal Allowance (PA)* £11,850 £11,500
Rent a room relief** £7,500 £7,500
Trading Income** £1,000 £1,000
Property Income** £1,000 £1,000
Dividend Allowance (DA) £2,000 £5,000

10% of the PA (2018/19: £1,185; 2017/18: £1,150) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.

*PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £123,700 or more (2017/18: £123,000).

** If gross income exceeds it, the limit may be deducted instead of actual expenses.

 

Rate Bands 2018/19 2017/18
Basic Rate Band (BRB) £34,500 £33,500
Higher Rate Band (HRB) £34,501 – £150,000 £33,501 – £150,000
Additional rate over £150,000 over £150,000
Personal Savings Allowance (PSA)

– Basic rate taxpayer

– Higher rate taxpayer

 

 

£1,000

 

£500

 

 

£1,000

£500

 

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

 

Tax Rates 18/19  & 17/18 General Savings Dividends
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 45% 45% 38.1%

General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest).

To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%. Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £2,000 (2017/18: £5,000) of dividend income at nil, rather than the rate that would otherwise apply.

 

You pay Scottish Income Tax if you live in Scotland. It’s paid to the Scottish Government. Please speak to us about the applicate rates and bands.

 

Child Benefit Charge

 

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000

 

Pensions

 

Registered Pensions 2018/19 2017/18
Lifetime Allowance (LA) £1,030,000 £1,000,000
Annual Allowance (AA) * £40,000 £40,000

 

Annual relivable pension inputs are the higher of earnings (capped at AA) or £3,600.

*The AA is usually reduced by £1 for every £2 by which relevant income exceeds £150,000, down to a minimum AA of £10,000. The AA can be reduced to £4,000, where certain pension drawings have been made.

  

National Minimum Wage

 

Rates per hour From 01.04.18 From 01.04.17
Aged 25 and over £7.83 £7.50
Aged 21 – 24 £7.38 £7.05
Aged 18 – 20 £5.90 £5.60
Aged 16-17 £4.20 £4.05
Apprentices £3.70 £3.50

 

National Insurance Contributions

  

Class 1 (Employees) Employee Employer
Main NIC rate 12% 13.8%
No NIC on first £162pw £162pw
Main rate* charged up to £892pw no limit
2% rate on earnings above £892pw N/A
Employment allowance per business** N/A £3,000

 

*Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £892pw.

**Some businesses do not qualify, including certain sole director companies. Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee’s behalf under a PAYE settlement agreement (Class 1B).

 

Class 2 (Self-employed)
Flat rate per week £2.95
Small profits threshold £6,205

 

Class 3 (Voluntary)
Flat rate per week £14.65

 

Class 4 (Self-employed)
On profits £8,424 – £46,350 9%
On profits over £46,350 2%

 

Tax Free mileage allowances

 

Employee’s own transport per business mile
Cars first 10,000 miles 45p
Cars over 10,000 miles 25p
Business passengers 5p
Motorcycles 24p
Bicycles 20p

 

 Annual investment limits

 

2018/19 2017/18
Individual Savings Account (ISA)

– Overall limit

– Lifetime ISA

 

£20,000

£4,000

 

£20,000

£4,000

Junior ISA £4,260 £4,128
EIS – 30% relief* £2,000,000 £1,000,000
EIS eligible for CGT deferral relief Unlimited Unlimited
Seed EIS (SEIS) – 50% relief £100,000 £100,000
SEIS – 50% exemption for reinvested gains £100,000 £100,000
Venture Capital Trust (VCT) – 30% relief £200,000 £200,000

 

*For 2018/19, amount over £1m must be invested in ‘knowledge-intensive’ companies.

 

Capital Gains Tax

 

Annual exemption 2018/19 2017/18
Individuals & estates £11,700 £11,300
Most trusts £5,850 £5,650

 

Tax Rate 2018/19 & 2017/18 Rate
Individual (to basic rate limit)* 10%
Individual (above basic rate limit)* 20%
Entrepreneurs’ Relief (ER)** 10%
Trusts, estates* 20%

 

*Individuals are taxed at 18%/28% on gains on residential property and receipts of carried interest. Trusts are taxed at 28% in these circumstances.

 

**ER is available for lifetime gains of up to £10m. Qualifying disposals include a trading business and shares in a trading company (from a minimum 5% holding) by an officer/employee. Various conditions apply.

 

Corporation Tax

 

Corporation tax rate is 19% for the year to 31.03.2019 and 31.03.2018

 

Research and development relief From 01.01.2018 From 01.04.2015 to 31.12.2017
SME enhanced expenditure

deduction scheme*

130% 130%
Large company R&D Expenditure

Credit (RDEC) scheme**

12% 11%

 

*Additional deduction for qualifying R&D.

**Taxable expenditure credit for qualifying R&D. SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss.

 

Main capital allowances

 

Plant and machinery  
100% Annual Investment Allowance (AIA)                                   £200,000

 

Other rates
energy and water-efficient equipment 100%
writing down allowance: general pool (reducing balance) 18%
writing down allowance: special rate pool (reducing balance) 8%

 

The special rate pool includes long life assets, integral plant in buildings, thermal insulation.

 

From 01.04.18

CO2 (g/km)

From 01.04.15 to 31.03.18

CO2 (g/km)

Allowance
New cars only up to 50 up to 75 100%
In general pool up to 110 up to 130 18% pa
In special rate pool above 110 above 130 8% pa

 

VAT

 

Standard rate 20%
Registration level from 1.4.2018 £85,000 per annum
Deregistration level from 1.4.2018 £83,000 per annum

 

Many of the rates and allowances shown above are subject to a range of exceptions and special rules that apply in different circumstances. The details set out above should be taken only as a general guide.